I have a radical idea for you: The US should default on its debt. Not just the bits and pieces that will come calling in August, but all the bits and pieces before and after that. All 11 trillion of it. Many people will be very unhappy about this, but I suggest that the balancing finger be the middlemost one.
Under this scheme, government would continue all functioning, or malfunctioning as the case may be, paying out promises such as medicare and social security and salaries, but setting debts as the lowest possible priority.
The budget would need to be instantly balanced, possibly by dramatic cuts in services (possibly a contradiction of my earlier "paying out promises such as medicare and social security" which needs to be resolved) and certainly with substantial increases in taxes and reductions in loopholes and exemptions. Why? Because after this there's little chance that anyone would loan money except at unacceptable interest rates. The US would have to balance the budget, even without a so-called balanced budget amendment (which is a stupid idea anyway), due to the high cost of borrowing. On the other hand, a fresh balance sheet could mean a possibility of being able to pay off any new debts, so maybe it would be less dire than I expect. The process of balancing would be made significantly easier by not needing to pay interest on the debt.
If somehow there remain money in the budget it would go to debtors, but in a certain order. Foreign debtors would have the absolute lowest priority. Semi-national, such as debt held by multi-national corporations, would be next lowest. Next would be debts to national banks or other holders. The highest priority would be individuals, in reverse order of the size of the debt they hold, meaning that the smallest debts are paid back first.
This order is not arbitrary. It is instead structured to serve the dueling needs of national interest and social need. Paying foreign citizens or companies while allowing our own to be shortchanged makes no sense from a nationalist perspective. Then the goal is to pay back those who are in most need of money, most likely those with the fewest holdings, since it's logical that someone breaking even in their budgeting will not be buying up much debt whereas the well-off can afford the temporary loss.
I see only one minor problem with this idea. That is that it would possibly destroy the world economy. Currently Treasury bonds are the safe bet. Everyone buys them if they want a safe place to put money. They're as good as gold, except possibly better because they don't have dim-witted hacks shilling them on TV to scared sheep (BUY GOLD NOW!!!). A complete default and refusal to pay any debt would be the end of that.
Beside potentially destroying the world, I don't see many downsides to this idea.
P.S. In regard to taxing the rich, is it really accurate to call them the "job creators" when they're clearly not doing so? Might as well call me a job creator.
Guild Wars and the big One-Oh
1 hour ago